U.S. Household Wealth Hit Record $106.9 Trillion Last Quarter

(Bloomberg) -- U.S. household wealth rose by $2.19 trillion to a fresh high in the second quarter, boosted by a stock-market rally and higher property values, figures from the Federal Reserve showed Thursday.

Highlights of Household Wealth (Second Quarter)

  • Net worth for households and non-profit groups rose by 2.1% q/q to $106.9t, according to Fed’s financial accounts data, previously known as the flow of funds report
  • Value of financial assets, including stocks and pension fund holdings, increased by $1.7t
  • Household debt increased at a 2.9% annualized rate after 3.2% 
  • Household real-estate assets rose by $496.1b; owner’s equity as share of total real-estate holdings up to 59.9% from 59.5% 

Key Takeaway

Household wealth reflected continued gains in property prices and a 2.9 percent advance in the S&P 500 Index last quarter after a pullback earlier this year. Stocks have since advanced, trading at a record on Thursday. The S&P CoreLogic Case-Shiller 20-city home values index has posted annual gains of at least 6 percent each month since September 2017.

Increasing net worth, lower taxes and a strong job market are among reasons economists expect consumer spending will remain the driver of growth this year.

The report reflected various revisions, including those that were part of the Commerce Department’s comprehensive update to gross domestic product released in July. The Fed said another change to calculations meant corporate equities are now included as assets of nonfinancial corporations; previously, “the sector’s holdings were netted against its outstanding amount of corporate equities.”

Counting equities under the updated methodology, the latest figures showed companies had $4.35 trillion in liquid assets, including cash, deposits, debt securities and stocks, compared with a revised $4.38 trillion in the prior quarter. Liquid assets were previously reported for the first quarter at $2.66 trillion.

Another change in methodology resulted in a sizable boost to household holdings of money-market fund shares, according to the report.

Other Details

  • Mortgage borrowing increased at a 2.5 percent pace, slowest since 2016; other forms of consumer credit, including auto and student loans, climbed at a 4 percent rate
  • Total non-financial debt grew at a 4.6 percent annual pace, after 7.5 percent in prior quarter
  • Federal government obligations advanced 6.9 percent, down from 17.2 percent rise in prior quarter; state and local government debt fell at 0.4 percent pace for sixth decline in seven quarters
  • Business borrowing increased 4.6 percent, fastest in three quarters

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